A key feature of the business cycle data is that output, employment and investment move up and down together in dierent sectors of the economy. However, standard business cycle models fail to generate this business cycle sectoral co-movement. In this paper we propose a two-sector business cycle...

Strong procyclical fluctuations in the durable production are the most prominent feature of the empirical response to monetary shocks. This paper investigates the role of preferences in matching this feature of the data in a two-sector sticky price model with flexibly priced durables. The...

Output responses to oil-price shocks not only tend to be weaker, but also to peak earlier recently. This paper builds a model that incorporates a realistic structure of US petroleum consumption and explores three possible explanations for the changes. The rst is based on deregulation in the...